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DEFINITION OF TERMS <br />1. Maximally Productive Use: The use that brings the highest value to the site. <br />2. Build to Sui~ Improvements constructed to the exact specifications of the future owner <br />and/or tenant. <br />3. Triple Net Ren~ The tenant is responsible for all real estate operating expenses, excluding <br />management and structural reserves that is paid by the landlord. <br />4. Full Service Rent: The landlord is responsible for all real estate operating expenses. <br />5. Marshall Valuafion Service: This national cost estimating guide publishes the average <br />cost of various building types. The costs include the following: construction interest, <br />permits, architect's and engineering fees, taxes during construction, contractor's <br />overhead and profit, and standard tenant improvements. The costs does not include: <br />miscellaneous indirect costs, site improvement costs, absorption costs, <br />entrepreneurial profit and overhead, and land acquisition. <br />6. Absorption Costs: The costs associated with lease-up of available space, which typically <br />includes rent loss and leasing commissions. <br />7. Gross Building Area: The total floor area of a building, including below-grade space but <br />excluding unenclosed areas, measured from the exterior of the walls. <br />8. Net Rentable Area: BOMA defines as "the result of subtracting from the gross building <br />area of any given floor, the major verfical penetrations on that same floor." <br />9. Effective Gross Income: The anticipated income from all operations of the real properfy <br />after an allowance is made for vacancy and collection losses. Effective gross <br />income includes items constituting other income, i.e., income generated from the <br />operation of the real property that is not derived from space rental (e.g., parking <br />rental or income from vending machines). <br />10. Net Operating Income: The actual or anticipated net income that remains after all <br />operating expenses are deducted from effective gross income, but before <br />mortgage debt service and book depreciation are deducted; may be calculated <br />before or after deducting replacement resenies. <br />11. Vanilla Shell: Describes the condition of retail space when leasing. Typically reflects the <br />shell condition of the space, with the tenant to incur all costs to finish the space to <br />their own specifcations. ~ <br />P99239 PALMER, GROTH ~ PIETKA, INC. 43 <br />